Marketing

Question 1

What is market segmentation?

Answer 1

Market segmentation involves putting potential customers into groups based on specific criteria or characteristics

Question 2

How can a business segment its market?

Answer 2

Age - consumers are divided into groups based on age brackets e.g. 18+

Gender - consumers are grouped together based on gender e.g. in the cosmetic and cornering markets

Income level - consumers are grouped together based on how much disposable income the have

Lifestyle/hobby - consumers who have a particular lifestyle e.g. vegans or gamers

Religion - consumers are grouped together based on their religious or cultural beliefs

Question 3

What is a target market?

Answer 3

A target market is a specific group of people or customers that a business aims to reach and engage with through its marketing efforts

By knowing the preferences and characteristics of their target audience, businesses can develop and offer products or services that align with their specific needs and desires

Question 4

Advantages of market segmentation:

Answer 4

-Provides deeper insights into customers diverse needs, preferences and behaviours allowing business to understand their audience more effectively

-Businesses can tailor their marketing efforts to specific segments, developing messages and positioning their products more effectively to appeal to the needs and wants of each segment

-It helps a business direct its marketing efforts and resources towards the most promising segments resulting in a higher return on investment

-By understanding and targeting specific segments, businesses can differentiate themselves from competitors and gain a competitive edge in the market

Question 5

Advantages of target marketing:

Answer 5

-Products will be better suited to the target markets needs or wants leading to improved customer satisfaction

-Businessss will choose appropriate pricing that appeals to the target markets leading to an increase in sales

-Businesses will sell their products in appropriate places where the target marjet shops leading to an increase in sales

-There is a decreased chance of product failure leading to the likelihood of a reduction in wasted investment by businesses

Question 6

What is market research?

Answer 6

Market research is the process of gathering, recording and analysing data about customers, competitors or market trends. Conducting market research allows a business to make better informed decisions relating to the marketing of their product

Question 7

Why do businesses use market research?

Answer 7

-Identifying what the target markets should be for the product/service

-Finding out what the target markets needs/wants are so as to design products that satisfy them

-Finding out how much the target market would be willing to pay for products so as to set appropriate pricing

-Gathering information about competitors allowing them to gain competitive advantages

Question 8

What are the two types of market research?

Answer 8

Field and desk research

Question 9

What is field research?

Answer 9

Field research involves a business gathering brand new information themselves using methods such as face to face interviews and focus groups

This type of research collects PRIMARY information

Question 10

What is desk research?

Answer 10

Desk research involves the use of pre-existing data that has been gathered by someone else

This type of research collects SECONDARY information

Question 11

Advantages of field research:

Answer 11

-Data collected is brand new and up to date

-Data is not available to competitors

-Research is tailored to the specific requirements of a business meaning the data gathered is highly relevant

Question 12

Disadvantages of field research:

Answer 12

-It can be an expensive method of research compared to desk

-It can be a time consuming process, meaning that decisions can’t be made quickly

Question 13

What is a personal interview?

Answer 13

The researcher conducts a face-to-face interview with the respondent using a questionnaire containing standardised questions. Personal interviews allow the
researcher to clarify questions for the respondent

HOWEVER they are a relatively time consuming method of carrying out field research

Question 14

What is a telephone survey?

Answer 14

The researcher conducts an interview with the respondent over the telephone using a questionnaire containing standardised questions. Telephone surveys allow
a large number of respondents to be surveyed at relatively little expense

HOWEVER many people see market research calls as a nuisance and will refuse to take part

Question 15

What is a postal survey?

Answer 15

A questionnaire is sent through the post to respondents who mail it back upon completion. Postal surveys can cover a wide geographical area and can target specific target markets based on postcode

HOWEVER they have a very low response rate as many people view it as junk mail

Question 16

What is an online survey?

Answer 16

A questionnaire is hosted on the internet for respondents to complete. Many online surveying tools such as Survey Monkey will provide automatic analysis, graphs and summaries of the data collected

HOWEVER this method relies on people having internet access

Question 17

What is a hall test?

Answer 17

Respondents are given a sample of the product to try and their feedback is gathered. This method allows the researcher to gather high-quality, qualitative feedback instantly

HOWEVER respondents might feel compelled to give a positive response out of politeness

Question 18

What is a focus group?

Answer 18

A group of volunteers from a target market are brought together to discuss a product. The researcher will record what is being said. The respondents have actively volunteered to be part of the focus group, which means they should have lots of opinions to share

HOWEVER organising focus groups is a relatively expensive and time-consuming method of research

Question 19

What are common sources of desk research used by businesses?

Answer 19

-Government reports and statistics (such as census data)

-Reports produced by market research companies such as Mintel

-Competitors websites

-Trade magazines and journals

-Reputable newspapers

Question 20

Advantages of desk research:

Answer 20

-It is a relatively inexpensive way of gathering and obtaining data

-It is relatively quick compared to field research, meaning decisions can be made quicker

-Large amounts of information and data are available at little to no cost

Question 21

Disadvantages of desk research:

Answer 21

-The data gathered could be out of date, leading to poor decisions being made

-The same information is also available to competitors

-The information may contain bias

Question 22

What is the marketing mix?

Answer 22

Product, price promotion and place

Question 23

What are the 6 stages of research and development?

Answer 23

1. Conduct market research to find out what consumers need/want in a new product
2. Generate an idea based on the data collected from the market research
3. Generate a prototype (a basic model which shows the product looks and functions)
4. Test the market by giving consumers a basic model of the product to try and gather feedback
5. Make changes based on tests and feedback gathered from consumers
6. Put the final product into production

Question 24

What are the 4 stages of the product life cycle?

Answer 24

Introduction, growth, maturity and decline

Question 25

Stages of the product life cycle: Introduction

Answer 25

-The product is first launched onto the market -Sales are low and slow as very few customers are aware of the product -Heavy advertising will be required to make customers aware of the product -Most products make a loss due to low sales and high advertising costs

Question 26

Stages of the product life cycle: Growth

Answer 26

-Sales begin to rise quickly as more customers become aware of the product and have been persuaded to buy it -Heavy advertising is still required -Most products being to be ok profitable by the end of this stage

Question 27

Stages of the product life cycle: Maturity

Answer 27

-The product has been on the market for a while and has an established customer base -Sales of the product have reached their peak -As the product is now well established less advertising is required -Due to high sales and a reduction in advertising costs profits will reach their peak

Question 28

Stages of the product life cycle: Decline

Answer 28

-Sales of the product fall quickly as the product has been on the market for a long time and newer products have been released which consumers are buying instead -Profits fall due to decreasing sales, the business will withdraw the product from the market before it starts to become unprofitable

Question 29

Advantages of branding:

Answer 29

-Consumers tend to perceive branded good as being of a higher quality -Customers will become brand loyal meaning they will buy that brand often -Customers are often willing to pay a higher price for branded goods -Costs and risks of launching a new product and reduced as consumers are already aware of the brand

Question 30

Disadvantages of branding:

Answer 30

-Establishing a brand can be a very expensive and time consuming process -The entire brand could be damaged by one poor product in the range -Branding goods makes them easy to copy for counterfeiters

Question 31

Why is packaging a necessary cost for a business?

Answer 31

-Protects products from being damaged -Helps keeps products fresh -Provides legally required information e.g. nutrition values

Question 32

How do businesses use packaging in the marketing of a product?

Answer 32

-Packaging will be designed to reflect product branding e.g. choice of colours or fonts -Packaging will be designed to appeal to the target market e.g. choice of images and materials

Question 33

Factors to consider when pricing a product

Answer 33

-Cost of raw materials : the business will have to ensure the price is high enough to cover costs when making products to make sure profit is made on each product sold -Amount of profit : the business will price the product higher or lower depending on the level of profit it wishes to make -Competitors price : the business needs to consider whether to match the price charged by competitors or choose a different strategy to stand out from the crowd -Quality of product : the price set by a business reflects the quality of the product if they charge a high price for a poor product customers satisfaction will decrease -Target market : the business must choose a price acceptable to their target market otherwise they will struggle to persuade people to buy it -Government restrictions : government legislation restricts the minimum or maximum amount a business can charge for the product e.g. minimum unit pricing of alcohol

Question 34

What are long term pricing strategies a business may use?

Answer 34

-Premium pricing -Low pricing -Competitive pricing -Cost plus pricing

Question 35

What is premium pricing?

Answer 35

A business will set the price of their product higher than that of their competitors. It is used to give customers the perception of quality and luxury. To justify the high price businesses must ensure their product is of a high quality Example: Apple or Gucci

Question 36

What is low pricing?

Answer 36

A business will set the price of their products lower than that of their competitors. Low price is effective if markets where there is little brand loyalty and customers place price about all other decision making factors HOWEVER some customers will see low price as an indicator or poor quality and will be put off buying the product Example: Aldi or Ryanair

Question 37

What is competitive pricing?

Answer 37

This strategy involves setting the price of the product at the same level as that of competitors. As there is no difference in competitive prices businesses will then need to compete on other factors such as customer service and product quality to convince customers to buy from them

Question 38

What is cost plus pricing?

Answer 38

A business first calculates the cost of making or buying one unit of the product. They then add a percentage mark up to the cost price to calculate the selling price For example a business which adds a 25% mark up on a product which costs £1 to make will sell the profit for £1.25 Cost plus pricing ensures a profit is always made on any products sold as the selling price will always be higher than the cost price

Question 39

What are short term pricing strategies a business may use?

Answer 39

-Price skimming -Penetration pricing -Promotional pricing -Psychological pricing

Question 40

What is price skimming?

Answer 40

The price is set high when the product is first launched. Once there are no customers left willing to pay the initial high price, the price of the product is then gradually lowered over time This is most effective in markets where there is little to no competition

Question 41

What is penetration pricing?

Answer 41

The price is set low when the product is first launched. The aim of the low price is to attract customers away from competitors to buy the product. Once a customer base has been astavlished the business will then gradually increase the price over time It is effective when launching products into highly competitive markets such as cereal or soft drinks

Question 42

What is promotional pricing?

Answer 42

A short term reduction in the price of the product. It will be widely publicised and is used to generate increased sales or to sell off outdated products Examples include Boxing Day sales and buy one get one free (BOGOF) offers

Question 43

What is psychological pricing?

Answer 43

A price is selected which makes the customer feel they are getting a much better deal than they actually are. When using this strategy business will sisially avoid rounding prices up to whole numbers E.g. 99p sounds a lot cheaper to customers than £1

Question 44

Factors a business must consider when choosing a location?

Answer 44

-Type of business -Location of competitors -Cost of premises -Availability of labour -Transport links -Government incentives

Question 45

Why must a business consider the type of organisation it is when choosing a location?

Answer 45

Depending on what the activity of the business is some businesses will need to be located in particular areas. E.g. a wind farm needs to be in a rural area which is wind or else or will not generate electricity

Question 46

Why must a business consider the location of its competitors when choosing a location?

Answer 46

A business must consider whether it will make greater sense to locate near or far from competitors E.g. a small independent coffee shop might try to avoid areas with well known chains such as Costa as they will find it difficult to compete with them. However a shopping centre food court may attract many people so setting up next to competitors may result in better sales

Question 47

Why must a business consider the cost of premises when choosing a location?

Answer 47

A business will have to choose a location it can afford where rent or mortgage is low enough to allow it to make a profit Most retail businesses would choose to locate in city centres or places with high footfall however it is very expensive to rent premises in these areas

Question 48

Why must a business consider the availability of labour when choosing a location?

Answer 48

A business must consider whether the location they choose has enough people with the appropriate skills to e,ploy People will only be willing to travel so far for work so the business will have to locate near a populated area with enough people of an appropriate skill level

Question 49

Why must a business consider transport links when choosing a location?

Answer 49

A business should assess the transport links to the location. It is essential that the area has good road and public transport links to allow customers and employees to easily reach the location

Question 50

Why must a business consider government incentives when choosing a location?

Answer 50

A country's government might offer incentives, such as grants, to businesses who locate their operations in a specific area. By locating in a government specified area, the government will provide the business with money to help set up their operations there

Question 51

What is e-commerce?

Answer 51

E-commerce is the buying and selling of products and services via the internet

Question 52

Advantages of e-commerce?

Answer 52

-Consumers across the world can buy from the business, likely to result increased customers -Customers can buy at whatever time is most convenient for them which means number of sales will increase -Businesses to not have to pay rent or buy a physical premises which means costs are reduced -Websites can display an unlimited number of products which improves customer choice and satisfaction

Question 53

Disadvantages of e-commerce?

Answer 53

-Customers can handle or try on products before buying which may lead to the business spending a lot of time processing returns or refunds -High initial costs in creating a high quality professional website -Increased competition as business now have to compete with other online competitors across the world which could result in a loss of customers -Ongoing maintenance and updates of websites can be expensive

Question 54

What is road distribution?

Answer 54

Distribution using trucks, vans and lorries to deliver via the road network

Question 55

Advantages of road distribution?

Answer 55

-Only method that allows for direct door to door delivery -Relatively quick and cheap method for delivering across short distances

Question 56

Disadvantages of road distribution?

Answer 56

-Traffic jams or bad weather can cause delays -Only transports a relatively small quantity of good

Question 57

What is rail distribution?

Answer 57

Distribution where goods are transported by trains using the rail network

Question 58

Advantages of rail distribution?

Answer 58

-Large quantities of goods can be transported -Relatively environmentally friendly

Question 59

Disadvantages of rail distribution?

Answer 59

-Distribution is limited to where there are any stops at all -Goods still have to be transported to customers from the train station

Question 60

What is sea distribution?

Answer 60

Transporting goods around the world using cargo ships

Question 61

Advantages of sea distribution?

Answer 61

-Much larger quantities of goods can be transported than that of planes or lorries -Cheaper than air travel

Question 62

Disadvantages of sea distribution?

Answer 62

-Very slow compared to air travel -Goods still have to be transported to the customer from the port

Question 63

What is air distribution?

Answer 63

Transporting goods around the world using cargo planes

Question 64

Advantages of air transport?

Answer 64

-Quickest method for transporting goods globally -Planes can reach parts of the world that other methods can’t

Question 65

Disadvantages of air distribution?

Answer 65

-Very expensive -High carbon footprint -Goods still have to be transported from the airport to customers

Question 66

What is the purpose of promotion?

Answer 66

-Inform customers that products exist -Provides customers with information about what the product is and what is does -Persuades customers to buy the products -Convinces customers to buy from the business rather than its competitors

Question 67

What is traditional advertising?

Answer 67

Advertising methods which have been around for a long time e.g. print and televsion

Question 68

What is digital advertising?

Answer 68

Methods which have come about due to developments in technology e.g. SMS and websites

Question 69

What is television advertising?

Answer 69

Adverts combining audio and video show during the breaks of show

Question 70

Advantages of television advertising

Answer 70

-Potential to reach a very large audience as many people watch TV -Demonstrations of the product can be given

Question 71

Disadvantages of television advertising

Answer 71

-Relatively expensive method -Modern technology and ‘channel’ hopping means consumers can avoid watching TV adverts

Question 72

What is newspaper advertising?

Answer 72

Printed adverts containing text and images

Question 73

Advantages of newspaper advertising?

Answer 73

-Adverts can be cut out by consumers for future reference -Customers can be targeted through choice of newspaper

Question 74

Disadvantages of newspaper advertising?

Answer 74

-Limited to only text and images which makes it difficult to make adverts memorable -They contain many adverts making it difficult to stand out from the crowd

Question 75

What is billboard advertising?

Answer 75

Posters placed on large signs usually at the side of busy roads

Question 76

Advantages of billboards advertising?

Answer 76

-Consumers will see the advert repeatedly increasing the chances of them remembering it -Usually placed in busy areas meaning lots of consumers will see it

Question 77

Disadvantages of billboard advertising?

Answer 77

-Can only contain a small amount of information as most people will pass it quick -Can get vandalised or damaged by weather easily

Question 78

What is cinema advertising?

Answer 78

Advertising combining audio and video shown before the start of films

Question 79

Advantages of cinema advertising?

Answer 79

-Advanced sound and screen technology makes it more engaging -There is a captive audience that will see the advert

Question 80

Disadvantages of cinema advertising?

Answer 80

-Relatively small number of people will see the advert at any one time -Consumers arrive purposely late to avoid viewing the adverts

Question 81

What are internet adverts?

Answer 81

Banners and adverts placed at the top and sides of websites

Question 82

Advantages of internet adverts?

Answer 82

-Can reach a global audience if consumers world wide visit the website -Can target specific market segments by their interests and they websites they use

Question 83

Disadvantages of internet adverts?

Answer 83

-Will be ignored if they are not focused on the content of the website -Can be difficult to stand out from many other adverts consumers will be seeing when browsing the internet

Question 84

What is SMS advertising?

Answer 84

Text messages sent to customers

Question 85

Advantages of SMS advertising?

Answer 85

-Cost effective as can be sent to large volume lf consumers simultaneously -Customers receive messages instantly

Question 86

Disadvantages of SMS advertising?

Answer 86

-Customers can become annoyed if they receive lots of messages -SMS can only contain a very limited amount of information

Question 87

What are some promotional strategies a business may use?

Answer 87

-Special offers -Free samples -Loyalty scheme -Free gift -Competition -Celebrity endorsement

Question 88

What is a special offer?

Answer 88

A short term reduction in price which aims to encourage sales of a product. Common examples of special offers include buy one get on free and percentage discounts e.g. 20% off

Question 89

What is a free sample?

Answer 89

Customers are given free samples of the product to allow them to try it first without buying it, if they like the product it is hoped they will then purchase it

Question 90

What is a loyalty scheme?

Answer 90

Involve customers collecting stamps or points every time they make a purchase from a business which can be redeemed at a later date for free products or discounts. Many coffee shop chains give out loyalty cards which ate stamped every time the customer buys a coffee. Once the customer has collected a certain number of points the card can be redeemed for a free drink

Question 91

What is competition in terms of promotional strategies?

Answer 91

The customer is entered into a draw to win prizes e.g. electronics and holidays, by buying the product more often as it increases their chances of winning a prize

Question 92

What is celebrity endorsement?

Answer 92

Involves using famous well liked faces to promote a product. The celebrity might appear in an advert for a proof gf or make social media posts discussing it. Fans of the celebrity are then likely to buy it if they see the celebrity also uses it

Question 93

How can a business be ethical in their marketing?

Answer 93

-Not intentionally mislead customers by making false claims about a product -Ensure adverts do not contain indecent or obscene content -Not intentionally include content which could offend consumers moral or cultural beliefs -Make sure adverts comply with legislation regarding the promotion of products to children e.g. avoiding ‘pester power’

Question 94

How can a business use the internet when marketing?

Answer 94

-A business may sell their goods via the internet (e-commerce) -Can also be used to conduct market research by gathering secondary information from reliable sources -Can also be used to place advert banners on websites which they know their target market are likely to use

Question 95

How may a business use desktop publishing when marketing?

Answer 95

Desktop publishing software can be use to create high quality, attractive adverts and promotional material

Question 96

How may a business use email when marketing?

Answer 96

-Send information about new products and special offers directly to customers -Customers must consent to the business using their email for this purpose and can get annoyed if they receive too many marketing emails

Question 97

How may a business use smartphone when marketing?

Answer 97

-A business may develop a smartphone app which allows customers to browse and purchase products directly through the app (m-commerce) -The business may offer exclusive discounts to encourage customers to download and use their app

Question 98

How may a business use databases when marketing?

Answer 98

-Used to store customers details -The query function can be used to quickly search the databases to find customers who meet specific criteria